ACIT, Jaipur V. LATALA CONSTRUCTION COMPANY, Jaipur

ITA 52/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5119 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: MAHENDRA GARGIEYA DHK

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LN L; DS LE{K BEFORE:SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, J M VK;DJ VIHY LA-@ ITA NO. 52/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE ACIT CIRCLE- 5 JAIPUR CUKE VS. M/S. LATALA CONSTRUCTION COMPANY B-19, TRANSPORT NAGAR JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABFL 1873 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY: SHRI R.A. VERMA, ADDL.CIT -DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA, ADVOCATE LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/08/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 14 /09/2016 VKNS'K@ ORDER PER LALIET KUMAR, JM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)- 2, JAIPUR DATED 27-11-2014 FOR THE ASSESSME NT YEAR 2009-10 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN:- (I) DELETING THE ADDITION OF RS. 17,52,474/- MADE B Y ON ACCOUNT OF COMMISSION ON BANK GUARANTEE. (II) DELETING THE ADDITION OF RS. 17,20,760/- MADE BY AO ON ACCOUNT OF PREPAID BROKERAGE ON BANK GUARANTEE. ITA NO. 52/JP/2015 THE ACIT, CIRCLE- 5, JAIPUR VS. M/S. LATALA CONSTRU CTION COMPANY, JAIPUR . 2 2.1 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT(A) HAD ERRED IN D ELETING THE ABOVE ADDITIONS I.E. RS. 17,52,474/- ON ACCOUNT OF COMMI SSION ON BANK GUARANTEE AND RS. 17,20,769/- ON ACCOUNT OF PREPAI D BROKERAGE ON BANK GUARANTEE. 2.2 THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY DELETED B OTH THE ADDITIONS. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FEEL THAT IT IS NOT IMPERAT IVE TO REPEAT THE FACTS OF THE CASE AS THE AO HAS ALREADY TAKEN INTO CONSIDERA TION WHILE MAKING BOTH THE ADDITIONS IN HIS ASSESSMENT ORDER. IT IS F URTHER NOTED THAT THE AO HAD DISALLOWED U/S 40(A)(IA), COMMISSION ON BANK GU ARANTEE AMOUNTING TO RS. 17,52,474/- AND PREPAID BROKERAGE ON BANK GUARA NTEE AMOUNTING TO RS. 17,20,769/- AS THE ASSESSEE HAD NOT DEDUCTED TH E TAX AT SOURCE IN ACCORDANCE WITH THE PROVISION OF SECTION 194H OF TH E ACT. IT IS ALSO NOTED FROM THE RECORD THAT THE LD. CIT(A) HAD TAKEN INTO CONSIDERATION THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF KOTA S ECURITIES (2012) 18, TAXMANN.COM 48 (MUM) AND DELETED BOTH THE ADDIT IONS BY OBSERVING AS UNDER:- ITA NO. 52/JP/2015 THE ACIT, CIRCLE- 5, JAIPUR VS. M/S. LATALA CONSTRU CTION COMPANY, JAIPUR . 3 2.3.3 THE ABOVE JUDGEMENT IS APPLICABLE TO THE FACTS OF THIS ISSUE. THE COMMISSION ON BANK GUARANT EE IS NOT COVERED BY THE EXPRESSION COMMISSION OR BROKERAGE AS ENVISAGED IN SECTION 194H SINCE THE RELATIONSHIP BE TWEEN THE ASSESSEE AND THE BANK IS NOT OF PRINCIPAL-AGENT. AL SO, COMMISSION ON BANK GUARANTEE IS NOT COVERED BY THE EXPLANATION (I) WHICH GIVES AN INCLUSIVE DEFINITION OF THE TERM COMMISSION ON BROKERAGE. FOLLOWING THE ABO VE ORDER OF THE ITAT MUMBAI, IT IS HELD THAT THE APPEL LANT IS NOT LIABLE TO DEDUCTION AT SOURCE ON COMMISSION ON BANK GUARANTEE AS PER THE PROVISION OF SECTION 194H AND THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE ON THIS EXPENDITURE. 2.3.4 AS REGARDS THE PREPAID COMMISSION BANK GUARANTEE OF RS. 17,20,769/-, THERE IS NO DISPUTE T HAT THIS EXPENDITURE IS A PREPAID EXPENDITURE WHICH HAS NOT BEEN DEBITED IN THE P&L ACCOUNT OR CLAIMED AS EXPENDITUR E. IT HAS ALREADY BEEN HELD THAT PROVISIONS OF SECTION 40(A)( IA) R.W.S. 194H ARE NOT APPLICABLE ON COMMISSION TO BANK GUARA NTEE. ALSO, WHERE IS THE QUESTION OF DISALLOWING SUCH EXP ENDITURE WHICH HAS NOT BEEN DEBITED IN THE P&L ACCOUNT OR CL AIMED AS EXPENDITURE? 2.3.5. IN VIEW OF THE ABOVE DISCUSSION, THE ASSESSI NG OFFICER IS DIRECTED TO DELETE THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF COMMISSION ON BANK GUARANTEE AND PR EPAID COMMISSION ON BANK GUARANTEE. THIS GROUND IS ALLOW ED IN THE LIGHT OF THE ABOVE DELIBERATIONS AND IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE DECISION FOLLOWED BY THE LD. CIT(A) OF ITAT MUMBAI BENCH IN THE CASE OF KOTAK SE CURITIES (SUPRA), WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON BOTH THE ISSUES WHICH IS SUSTAINED. THUS THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 52/JP/2015 THE ACIT, CIRCLE- 5, JAIPUR VS. M/S. LATALA CONSTRU CTION COMPANY, JAIPUR . 4 3.0 IN THE RESULT, APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 /09/2016 . SD/- SD/- HKKXPUN YFYR DQEKJ (BHAGCHAND) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14/09/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE- 5, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. LATALA CONSTRUCTION COMPANY, J AIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 52/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR